Case No. INT-G-05-2, Order No.
29856

August 26, 2005

Contact: Gene Fadness (208)
334-0339 office; (208) 841-1107 cell

The Idaho Public Utilities Commission will solicit comments
through Sept. 20 on the application by Intermountain Gas to collect an
approximate 27.6 percent increase from customers effective Oct. 1 to pay for
its increased costs in gas supply.

Intermountain Gas states the proposed increase is needed due
to higher prices it must pay to acquire natural gas for its customers. The
$67.6 million raised from the increase would be passed through directly to the
company’s gas suppliers. Intermountain Gas’s earnings would not increase as a
result of the proposed rate hike.

Commission staff will conduct workshops in Pocatello and
Boise to explain the company’s proposal to customers and allow customers to ask
questions and make comments.

The Pocatello workshop is Sept. 12 at 7 p.m. at the City
Hall council room at 911 N. 7th St. The Boise workshop is Sept. 13
at 7 p.m. at the commission hearing room, 472 W. Washington St.

The commission uses a yearly mechanism, called the Purchased
Gas Cost Adjustment (PGA), which allows the company to adjust rates to reflect
changes in the costs for purchases of gas from the Williams Northwest Pipeline
and other suppliers. The costs include transportation and storage.

Before the wholesale gas market became so volatile in recent
years, the PGA adjustment was not significant in most years and, during some
years, customers got decreases. That has not been true in the last three years
with the rapidly increasing cost of natural gas. In the past year, natural gas
prices have more closely followed the price of crude oil and both are at
historically high levels.

Intermountain Gas proposes to increase the component of
customer bills related solely to gas purchase costs from the current 55.5 cents
per therm to 73.2 cents. That figure reflects current market prices and a
forecast for the next year. Intermountain Gas states that it will continue to
monitor the market and come to the commission before the winter heating season
if forward prices significantly change from current projections.

If Intermountain Gas gets the full increase, an average bill
for a customer who uses natural gas for both space and water heating would
experience an average monthly increase of $17.26. For a customer who uses
natural gas for space heating only, the average monthly increase is $12.17. An
average household uses about 70 therms per month. Commercial customers would
see an increase of about $77.76 per month.

The commission will proceed
under a modified procedure that allows the case to be handled through written
public comments. Those wishing to submit comments must do so by no later than
Sept. 20. Comments are accepted via e-mail by accessing the commission’s
homepage at www.puc.idaho.gov and clicking on
"Comments & Questions." Fill in the case number (INT-G-05-02) and
enter your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID
83720-0074 or faxed to (208) 334-3762.

A
full text of the commission’s order, the company’s application and other
documents are available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room”
and then on “Gas Cases” and scroll down to Case No. INT-G-05-02.